Dominican Republic

The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.

It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.

  
Dominican Republic 2013
Tax / benefit of single persons

Wage level (% of average wage)

67

100

167

67

Number of children

0

0

0

2

1.

Gross wage earnings

151 394

225 961

377 355

151 394

2.

Standard tax allowances

4 345

6 485

10 830

4 345

Basic allowance

0

0

0

0

Married or head of family

0

0

0

0

Dependent children

0

0

0

0

Deduction for social security contributions and income taxes

4 345

6 485

10 830

4 345

Work-related expenses

0

0

0

0

Other

0

0

0

0

3.

Tax credits or cash transfers included in taxable income

0

0

0

0

4.

Central government taxable income (1-2+3)

147 049

219 476

366 525

147 049

5.

Central government income tax liability (exclusive of tax credits)

0

0

0

0

6.

Tax credits

0

0

0

0

Basic credit

0

0

0

0

Married or head of family

0

0

0

0

Children

0

0

0

0

Other

0

0

0

0

7.

Central government income tax finally paid (5-6)

0

0

0

0

8.

State and local taxes

0

0

0

0

9.

Employees’ compulsory social security contributions

Gross earnings

9 023

13 467

22 490

9 023

10.

Total payments to general government (7+8+9)

9 023

13 467

22 490

9 023

11.

Cash transfers from general government

0

0

0

0

For head of family

0

0

0

0

For two children

0

0

0

0

12.

Take-home pay (1-10+11)

142 371

212 494

354 864

142 371

13.

Employer’s compulsory social security contributions

24 813

37 035

61 848

24 813

14.

Average rates

Income tax (7 / 1)

0.0%

0.0%

0.0%

0.0%

Employees’ social security contributions (9 / 1)

6.0%

6.0%

6.0%

6.0%

Total payments less cash transfers [(10-11) / 1]

6.0%

6.0%

6.0%

6.0%

Total tax wedge including employer’s social security contributions [(10+13-11) / (1+13)]

19.2%

19.2%

19.2%

19.2%

15.

Marginal rates

Total payments less cash transfers: principal earner

6.0%

6.0%

6.0%

6.0%

Total payments less cash transfers: spouse

N.A.

N.A.

N.A.

N.A.

Total tax wedge: principal earner

19.2%

19.2%

19.2%

19.2%

Total tax wedge: spouse

N.A.

N.A.

N.A.

N.A.

Dominican Republic 2013
Tax / benefit of married couples

Wage level (% of average wage)

100-0

100-33

100-67

100-33

Number of children

2

2

2

0

1.

Gross wage earnings

225 961

300 528

377 355

300 528

2.

Standard tax allowances

6 485

6 485

10 830

6 485

Basic allowance

0

0

0

0

Married or head of family

0

0

0

0

Dependent children

0

0

0

0

Deduction for social security contributions and income taxes

6 485

6 485

10 830

6 485

Work-related expenses

0

0

0

0

Other

0

0

0

0

3.

Tax credits or cash transfers included in taxable income

0

0

0

0

4.

Central government taxable income (1-2+3)

219 476

294 043

366 525

294 043

5.

Central government income tax liability (exclusive of tax credits)

0

0

0

0

6.

Tax credits

0

0

0

0

Basic credit

0

0

0

0

Married or head of family

0

0

0

0

Children

0

0

0

0

Other

0

0

0

0

7.

Central government income tax finally paid (5-6)

0

0

0

0

8.

State and local taxes

0

0

0

0

9.

Employees’ compulsory social security contributions

Gross earnings

13 467

13 467

22 490

13 467

10.

Total payments to general government (7+8+9)

13 467

13 467

22 490

13 467

11.

Cash transfers from general government

0

0

0

0

For head of family

0

0

0

0

For two children

0

0

0

0

12.

Take-home pay (1-10+11)

212 494

287 061

354 864

287 061

13.

Employer’s compulsory social security contributions

37 035

37 930

61 848

37 930

14.

Average rates

Income tax (7 / 1)

0.0%

0.0%

0.0%

0.0%

Employees’ social security contributions (9 / 1)

6.0%

4.5%

6.0%

4.5%

Total payments less cash transfers [(10-11) / 1]

6.0%

4.5%

6.0%

4.5%

Total tax wedge including employer’s social security contributions [(10+13-11) / (1+13)]

19.2%

15.2%

19.2%

15.2%

15.

Marginal rates

Total payments less cash transfers: principal earner

6.0%

6.0%

6.0%

6.0%

Total payments less cash transfers: spouse

0.0%

0.0%

6.0%

0.0%

Total tax wedge: principal earner

19.2%

19.2%

19.2%

19.2%

Total tax wedge: spouse

1.2%

1.2%

19.2%

1.2%

The national currency is the Dominican Peso (DOP). In 2013, the average exchange rate was DOP 41.81 to USD 1. In that year, the average worker earned DOP 225 960.84.

The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.

Deciles of Incomes

1

2

3

4

5

6

7

8

9

10

Local currency (DOP)

59 279

83 553

102 549

123 912

146 895

172 401

201 375

260 713

376 255

754 652

USD1

1 418

1 999

2 453

2 964

3 514

4 124

4 817

6 236

9 000

18 051

Dollars in PPP2

2 941

4 146

5 088

6 148

7 289

8 554

9 992

12 936

18 669

37 444

Ratio to the minimum wage3

0.6

0.8

1.0

1.2

1.4

1.7

1.9

2.5

3.6

7.3

1. Average official exchange rates published by the central bank.

2. Calculated using the implied conversion rate (National currency per current international dollar in purchasing power parity) published by the IMF in the World Economic Outlook dataset.

3. Ratio of the income decile to the official minimum wage of the country.

1. Personal income tax system

The fiscal year is the calendar year.

1.1. Central government income tax

The personal income tax is levied on income from all sources (domestic and global), including those obtained by performing personal work (salaried or independent). Employment income includes salaries, bonuses, premiums, commissions and allowances (housing and education) and in-kind benefits.

The main exemptions for the personal income tax are:

  • Compensation paid due to work injury.

  • Amounts paid in compliance with life insurance contracts.

  • All severance and job termination compensation received in accordance with the Labour Code.

  • Compensation paid due to disability or illness.

  • Alimonies determined by law.

1.1.1. Tax unit

Members of the family are taxed separately

Resident individuals are subject to the income tax on their domestic and global income. Non-residents are subject to the tax on their income derived from Dominican Republic sources.

1.1.2. Tax allowances and tax credits

1.1.2.1. Standard tax allowances and tax credits

  • Contributions to approved social security plans that benefit the employee up to 5% of the taxable income during a fiscal year.

1.1.2.2. Main non-standard tax allowances and tax credits

  • Expenses incurred to maintain a source of income.

1.1.3. Tax schedule

The annual income tax liability is calculated on the taxable income according to the following schedule in 2013:

Income (DOP)up to

Marginal rate (%)

399 923

0

599 884

15

833 171

20

above

25

* There is an additional tax of 29% on the value of fringe benefits provided by employers to their employees. Such benefits are in addition to the wages received by the employee.

1.2. State and local taxes

No state or local taxes are levied on wages.

2. Compulsory social security contribution to schemes operated within the government sector

2.1. Employee contributions

Program

Marginal rate (%)

Old age, disability and survivors program

2.87

Healthcare program

3.04

Professional Training Institute – INFOTEP

0.05

Employees pay social security contributions on their gross wages. The lower earnings threshold is the minimum wage (DOP 8 648 per month and DOP 103 776 annually in 2013). The upper earnings ceilings for contributions vary between programs. The old age, disability and survivor’s program has a ceiling of 20 times the minimum wage; the ceilings for the health care program and the professional training institute contributions are 10 times the minimum wage.

2.2. Employer contributions

Employers are required to contribute to the following public programs.

Program

Marginal rate (%)

Old age, retirement and disability program

7.10

Healthcare

7.09

Work injury

1.20

Professional Training Institute – INFOTEP

1.00

The employer social security contribution rates are applied to the payroll. The upper earnings ceiling for the old age, disability and survivor’s program is set at 20 times the minimum wage. The corresponding ceilings for the Healthcare program, Professional Training Institute and Work injury programs are 10 times the minimum wage.

3. Universal cash transfer

3.1. Amount for spouse and for dependent children

None.

4. Main changes in tax/benefit since 2013

The new income tax legislation specifies that from the beginning of 2016, the personal income tax thresholds will be adjusted annually for inflation.

5. Memorandum items

5.1. Identification of an AW

The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys.